By VERNON CLEMENT JONES, Guardian Business Editor

Head of the union representing City Market's front-line workers is lambasting the company for what he terms a general lack of transparency surrounding administration of an employee pension fund and, more specifically, millions of dollars of its money used to help shore up the troubled business.

"I only learned about the $3m purchase after the fact," Elgin Douglas, president of the Bahamas Commercial Stores and Warehouse Workers Union told Guardian Business Thursday in an exclusive interview. "My members and I are very much concerned about the transparency of the fund's administration or the lack of it.

"We should be hearing about things like this sale firsthand, not secondhand in the paper and after it's long been done."

He shared those concerns with company heads yesterday morning, at the tail end of a week rocked by explosive news on the tenuous financial footing of City Markets and its holding company Bahamas Supermarkets Ltd.

In addition to finally disclosing long-overdue financials for fiscal 2007 — themselves unsettling enough given BSL's $189k net loss compared to the over $8m it reported for fiscal 2006 — the company also disclosed to shareholders it had last month, in a hunt for cash, sold $3m worth of physical assets to a pension plan for its employees, one it effectively controlled by it although it does not in fact contribute to it. It has now leased back those assets for $62,000 a month starting last month and for five years. It's a deal that should net the fund more than $700k at the end of the agreement considering the nine-percent interest being paid. It's worth noting that only weeks earlier the company turned to "related parties" for $1.3 million in cash injections. It also won $1.3 million increase to its overdraft from its lender, with that bank insisting on a 17.5 percent interest rate presumably because of the company's absence of audited results.

Douglas is satisfied that the rate offered the pension fund on its $3m lease represents an improvement over the three percent the company asserts would have otherwise earned (it's worth noting that even basic money market accounts return five or more).

Still, the union president — as well as two BSL investors Guardian Business spoke with yesterday — has questions about how equitable the deal really is given the company's unwillingness to disclose what interest rate that "related party" attached to its $1.3 million worth of lending and, more importantly, the whopping 17.5 percent the bank demanded for its overdraft.

"We want to know if the interest rate offered the fund was close to what those others got," said Douglas, also concerned about who or what exactly is acting as the fund's administrator. "There are no provisions included in the union's bargaining agreement with the company for disclosure of those details, said the trade unionist. "The only thing they've told us was that 'nothing will happen to the fund'."

Yesterday, BSL CEO Stephen Boyle spoke to some of those concerns.

"As stated in the financial statements," he told Guardian Business, "these transactions were 'related parties' who are shareholder, there was no fixed term nor interest incurred.

"Neither management nor the Board of Directors make any decisions regarding the pension fund, other than the amount to be assigned to the fund annually, which would be at the sole discretion of the Board of Directors."

He points to an "administrative committee" charged with the day to day administration of records and to provide recommendations to a separate Board of Trustees who act on behalf of the fund.

"In this instance I personally witnessed very strong, shrewd and impressive negotiation from the trustees on behalf of the fund and in turn on behalf of the employees of Bahamas Supermarkets Limited," said Boyle.

That may not be immediately apparent to those outsiders like Douglas and the shareholders Guardian Business spoke to Thursday, given that low interest the $3m in question was previously earning or indeed the move to involve the fund at all in helping to secure the company's financial footing.

Douglas, for one, wants more answers.

"It's only proper and fitting to tell the union representing City Market workers, worried about their money, all they need to know about how secure (the fund) is," he said.

Here, too, Boyle offers a counter argument.

"In this instance the employees representatives are the trustees of the fund not the union," he writes in a written statement, " which is why they have been put in place to act in the best interest of the employees.

"In normal day-to-day operations we have excellent relationships with our employees representatives and consult with them on a regular basis at an HR level, on a monthly basis the company set up an executive level meeting to keep all concerned parties informed at the highest level of our plans and initiatives. We take a very proactive approach to good industrial relations."

Still, one shareholder, part of the large minority group with no real board representation, argues the group that bought the 12 food stores from Winn-Dixie in 2006 for about $54 million should have never engaged the pension fund in any money raising scheme rather it should have sought to dispose of enough of its own shareholdings in order to raise cash all the necessary cash so obviously needed to keep the operation afloat.

"You have to ask who does the deal with the pension fund really benefit," said the small Nassau investor, a leader in the business community. "The answer is the major shareholders.

"They should have sold their own shares — even without financials they could have found buyers even if only at substantially discounted price and they should absolutely have done that rather than involve their workers."

He like others point to the all-but absolute absence of government pension regulations like that in the U.S. and Canada drawing broader distinctions between the company and any employee pension plan for its workers. Short of that, he said: "A fund administrator can legitimately have fiduciary responsibilities to both the company and the pension fund but the responsibilities to the fund must not be subjugated to those of the company. Never."